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Detroit has a lot of abandoned homes - more than 20,000. The city government is trying to do something about that by offering new financing incentives. And as we're about to hear, there are deals to be had. But repairing the houses can add tens of thousands of dollars to the cost. NPR's Jason Margolis has our story.
JASON MARGOLIS, BYLINE: Craig Fahle works for the Detroit Land Bank Authority, a quasi-governmental agency. Ask him exactly what a land bank is, and he'll tell you, they're the property owner of last resort. He shows me around a 1,300 square-foot Tudor-style home on Detroit's far east side.
CRAIG FAHLE: Properties come to us only after nobody else wants them anymore. They've gone through foreclosures and they come to us when they're in this kind of condition.
MARGOLIS: It's a mess.
FAHLE: Let's take a look behind here. Yeah. See, the radiator's gone.
MARGOLIS: Windows are missing, so are kitchen cupboards and the boiler. But the floors and the moldings look salvageable. It's one of his better properties. Fahle is hoping to get $25,000 for this place, but he'll take whatever he can to get it off the rolls.
FAHLE: We have to cut the grass on the properties. We can't do it every week or anything. We'll do it a couple of times a summer because, you know, we own 88,000 parcels of land in the city as a land bank. We own one-quarter of all the property in the city of Detroit.
MARGOLIS: Eighty-eight thousand properties?
FAHLE: Eighty-eight thousand.
MARGOLIS: Is that the largest of any city in the United States?
FAHLE: It might be the largest in the world.
MARGOLIS: Three-quarters of those lots are vacant. Those sell for 100 bucks. Neighbors are snatching them up to double their land. The Detroit Land Bank is now auctioning off three houses a day online, eBay-style. They've closed on just over 300 in a year since the auction site got going, 21,000 more to go. Mayor Mike Duggan says that's just not fast enough. He spoke last week at City Hall.
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MIKE DUGGAN: So three months ago, we kicked-off a program where city employees or their families, if they bid on a house on the land bank, could get a 50 percent discount.
MARGOLIS: That puts bidders who don't work for the city at a deep disadvantage. But the city says there's so much inventory, they have to do something to build demand. Besides, only 44 employees have a won those auctions. Duggan says the main problem is that whether you work for the city or not, it's hard to get a loan on a dilapidated property.
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DUGGAN: It's a typical house on the auction that you'll buy it for $10,000, you have to put 20,000 in to fix up. It's almost impossible to get a mortgage in that circumstance.
MARGOLIS: But now the city has a partner. Flagstar Bank is offering mortgages to city employees, loans that will cover the purchase price and necessary improvements. Flagstar is also offering $15,000 grants paid out over five years. Carolyn Abney was lured back to Detroit from the suburbs. I asked her about the home she's leaving...
CAROLYN ABNEY: I have one bathroom, and I have to fight over the bathroom.
MARGOLIS: ...And her new one in Detroit.
ABNEY: Twenty-two hundred square feet, there are three bathrooms, there's a circular staircase. It's just cute.
MARGOLIS: She bid 56,000. She could end up getting it for less than a quarter of that, and she can get a loan to fix the place up. Still, Craig Fahle with Detroit's land bank wants people to know what they're getting into. We stopped by another home about to go up for auction.
FAHLE: Gutters are missing. The neighbor's so generously parking his car on the lawn.
MARGOLIS: And the garage door is detached from the hinges. Still, it's an attractive colonial brick house. If nobody fixes it up though, the neighbors' property values will likely keep declining and the spiral will continue.
FAHLE: It's just a matter of time before somebody says enough, and they just do what a lot of other people have done and they leave.
MARGOLIS: Fahle says he's thrilled to get a thousand dollars for his worst houses. If not, it costs him $15,000 to tear them down. Jason Margolis, NPR News, Detroit.
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